The average residential rent across England and Wales is now two per cent higher than in July 2013, currently standing at £753 per month. This is the same absolute level as in November 2013, and is up from an average of £738 per month in July 2013.
Rents are just 0.1 per cent higher than a year ago after consumer price inflation of 1.9 per cent – the first real-terms increase since September.
David Newnes, director of estate agents Reeds Rains and Your Move, part of LSL Property Services, said: "As the summer turns to early autumn, the rental market is approaching its busiest period – yet rent rises remain modest.
"Tenants looking to rent a new property this month still need to budget the same as they would have in November. At a time when the UK is facing a serious shortage of homes, and with purchase prices rising steadily, that is an immense achievement for the private rented sector.
"Rents have tracked inflation for many years – and as of July remain down 0.2 per cent in real terms since the start of 2010. This is testament to serious improvements in the supply of new homes to let, thanks to investment by landlords. If that investment keeps flowing, and the right incentives for new landlords remain, this positive trend should continue."
Rents in nine out of 10 regions are higher than a year ago. The fastest annual increase is in the South East, where the average monthly rent is now 3.8 per cent higher than in July 2013.
On a monthly basis, eight out of 10 regions have seen rents rise in July.
Taking into account price growth alongside void periods between tenants, total annual returns on an average rental property stand at 10.3 per cent in the 12 months to July. This is up from 6.1 per cent in the year to July 2013, but represents a moderation on a monthly basis, down from 11.3 per cent in the year to June 2014.
In absolute terms this means the average landlord in England and Wales has seen a return, before any mortgage payments or other deductions, of £17,307 in the last twelve months. This is made up of rental income of £8,168 and an average capital gain of £9,140.
Looking ahead, if rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 8.5 per cent over the next year, equivalent to £15,050 per property.
David Newnes said: "Steadier price growth is good news for landlords aiming to minimise volatility in the value of their properties, while hoping for gradual and sustainable rises. Such capital accumulation will vary alongside the purchase market.
"Most encouraging for landlords considering future investments will be the stability of rental yields over the last six months.
"Looking ahead, the biggest risk for the health of the private rented sector is unconstructive government regulation. If this successful industry becomes a political football in the run-up to a general election then landlords will be frightened away from the market, and tenants would be worse off. However if political ideals can work in tandem with practical considerations, then the future is bright."
Tenant finances have improved on the previous month. The proportion of late rent is down from 7.8 per cent in June to the current level of 7.3 per cent in July. In absolute terms this represents a drop of £14 million owed in late rent within the space of one month.
Tenants' finances are also healthier on an annual basis in July. The total amount of late rent across England and Wales now stands at £252 million as of July 2014, down from £273 million in July 2013.
Source: Leciester Mercury
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